U.S. Withdraws $51 Million in Startup Aid—Kenyan and Nigerian SMEs Face Critical Funding Crunch

The United States African Development Foundation (USADF) has pulled the plug on $51 million in funding for startups and SMEs across Africa—disrupting growth pipelines in Nigeria and Kenya, two of the continent’s most vibrant innovation hubs.

This move, driven by the U.S. Department of Government Efficiency (DOGE)—a Trump-era agency now led by Elon Musk—is not just a budget cut; it’s a direct hit on the foundational capital that fuels grassroots entrepreneurship across sub-Saharan Africa.

Critical Projects in Jeopardy

From a $48,000 WhatsApp marketing bot in Kenya to an $84,000 wellness incubator in Nigeria, the cutback pulls the rug out from under promising early-stage ventures. More broadly, it threatens entire value chains built on low-risk, high-impact grants that traditional finance often won’t touch.

USADF has been a quiet powerhouse—supporting over 1,000 businesses in 22 countries, focusing on rural communities, women-led businesses, and underserved entrepreneurs. Nigeria and Kenya alone have received over $37 million combined, with more than 400 SMEs benefiting from the direct-to-founder funding model.

But all of that is now at risk.

What This Means for Africa’s Innovation Economy

Unlike venture capital or loans, USADF grants offer something rare in African entrepreneurship: non-dilutive, early-stage capital with built-in technical support. That’s the type of funding that helps a pineapple juice cooperative in Benin reach its first market, or a shea butter project in Burkina Faso build a value chain.

With this safety net gone, entrepreneurs will be exposed to market volatility, political instability, and fundraising gaps—many before they’ve even had the chance to reach product-market fit.

DOGE and the Pivot to Efficiency

The Department of Government Efficiency claims to have saved American taxpayers over $140 billion, mostly by canceling what it calls “inefficient” foreign programmes—including USAID’s Development Innovation Ventures (DIV), which itself cut over $100 million earlier this year.

While DOGE’s mission may resonate with domestic priorities in the U.S., its ripple effect in Africa is a funding cliff for innovation—one that will slow down momentum for SMEs at the edge of scale, especially those in agriculture, wellness, education, and community tech.

The Bigger Picture

The real tragedy here is the timing. African startups are beginning to show real traction—building scalable solutions, attracting global attention, and creating jobs. But they remain fragile, especially in regions where a $50,000 grant can be the difference between shutdown and survival.

What we’re witnessing is not just the evaporation of money—it’s the erosion of confidence in how global partnerships are structured. And that means Africa must reimagine how it funds its future.